Trade-off studies on spectral coverage, signal-to-noise ratio (SNR), and spectral resolution for a hyperspectral infrared (IR) sounder on a geostationary satellite are summarized. The data density method is applied for the vertical resolution analysis, and the rms error between true and retrieved profiles is used to represent the retrieval accuracy. The effects of spectral coverage, SNR, and spectral resolution on vertical resolution and retrieval accuracy are investigated. The advantages of IR and microwave sounder synergy are also demonstrated. When focusing on instrument performance and data processing, the results from this study show that the preferred spectral coverage combines long-wave infrared (LWIR) with the shorter middle-wave IR (SMidW). Using the appropriate spectral coverage, a hyperspectral IR sounder with appropriate SNR can achieve the required science performance (1 km vertical resolution, 1 K temperature, and 10% relative humidity retrieval accuracy). The synergy of microwave and IR sounders can improve the vertical resolution and retrieval accuracy compared to either instrument alone.